As we finish a tough year for stocks we should guard against pessimism since interest rate hikes should slow and level out and lower valuations for growth stocks could ignite a rally. Explorer stocks had little news as we sell one holding and are close to selling MP Materials (MP) as well. This week we go back to a small-cap medical technology stock trading at an attractive price.

Cannabis stocks and exchange-traded funds (ETFs) are ending the year at their lowest levels ever, and everyone knows exactly why. Sector investors were let down by lawmakers in Washington, D.C. who had suggested they’d secure approval of favorable banking reform by year-end while they still had the votes. This reform would have been a game changer since it would provide cannabis companies access to banking services and maybe even listings on major exchanges.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the January 2023 issue.

In this issue, we discuss our Top Five Stocks for 2023. While we like all of our recommendations, these five have what we believe are the most favorable combinations of risk/return potential and timeliness.

We also review this past year’s capital markets and grade our 2022 outlook. We also provide our outlook for 2023, acknowledging the wisdom of Yogi Berra’s advice that “predictions are difficult, especially about the future.”

Like nearly all asset classes, high-yield bonds had weak performance this past year. However, conditions are more favorable, and investors may want to nibble on new high-yield investments.

Our feature recommendation this month is one of the most disliked stocks in the market, social media company Meta Platforms (META). The company’s core fundamentals are strong but are being obscured by the immense waste of capital that is its metaverse investment. Any relenting on this mission could lead to an impressive turnaround of the company and its remarkably inexpensive stock.

Stocks trend higher over time. And history clearly illustrates that bear markets are ideal times to invest ahead of the next bull market. The average bear market is about 15 months long. And this one is already almost a year old. There is a high-percentage chance that a rally ignites in 2023 that will lead us out of this bear market and into the next bull market.

In our final issue of 2022, we have another Sell and three downgrades as the market ends its worst year in more than a decade with a fitting whimper. But better times are almost assuredly ahead in 2023, and with that in mind, we’re adding a mega-cap with mega-ambitions – tackling the world’s ever-expanding obesity epidemic. It’s a potentially $1.2 trillion market by 2025. And the stock has been one of the market’s few bright spots this year, up 19%. It’s a recent recommendation from Cabot Explorer Chief Analyst Carl Delfeld.

I’m going to keep it short today as we enter the first of two holiday-shortened weeks. The focus, as always, continues to be adding a few positions to balance out the mix of options strategies and our deltas. As it stands, we only have an iron condor heading into the January expiration cycle, but if all goes well, we should have an opportunity to add one or two January trades, and with 52 days left until February expiration, I will also be looking to add positions there as well.

I’m going to keep it short today as we enter the first of two holiday-shortened weeks. The focus, as always, continues to be adding a few positions to the mix. As it stands, we have five open positions with one position, WFC, due to expire this week. The rest are due to expire in January. My intent with WFC is to wheel our position, which simply means, if the stock closes below our put strike of 44 we will be issued shares and begin the process, once again, of selling calls against our newly acquired shares.

The much-anticipated Santa Claus rally has yet to materialize on Wall Street, though at least the recent losses mostly stopped for the indexes last week. The S&P 500 was virtually unchanged, the Dow gained 0.88%, and the Nasdaq fell 2.5%.

As I stated last week, we’re just three weeks away from earnings season. However, the next two weeks leave us with little to no trading opportunities as Wall Street pretty much closes up shop until after the holiday season passes. I expect that we will see a few opportunities during the second week of January, but the next two weeks are certain to be slow from an earnings announcement standpoint.

The much-anticipated Santa Claus rally has yet to materialize on Wall Street, though at least the recent losses mostly stopped for the indexes last week. The S&P 500 was virtually unchanged, the Dow gained 0.88%, and the Nasdaq fell 2.5%.

In the December Issue of Cabot Early Opportunities we look at five companies growing nicely and with share prices that have held up reasonably well in recent months.

Our top pick this month is a small-cap biopharma stock that just made a timely acquisition this week. I also feature a potential biotech superstar, an emerging MedTech name, a solar energy specialist and an online retailer that we’ve seen before.

As always, there should be something for everyone in this month’s Issue!

First, a couple housekeeping notes: With Santa coming in a few days, there will be no Cabot Profit Booster issue next Tuesday. Have a great holiday weekend!

The broad market making new highs this week gives us a bullish framework to work within. For the sectors that comprise most of Greentech, it’s a mixed bag, however.

Today’s note includes earnings updates on Macy’s (M) and the podcast. There were no ratings changes this past week. Also, a few scheduling changes as the CTL is on vacation next week.

Near the close today, the Dow was off 50 points, the Nasdaq was up 23 points, with both finding solid support after a weak open.

Some time ago, there was a television show with the above title that pulled viewers back into the 1970s. It used that earlier era to create a somewhat unique vibe that inadvertently highlighted how much has changed in our world over the decades.

Things are still good in the market. The S&P 500 closed at yet another record high on Monday. That index is now up 19.27% so far in 2021 after managing to return 15.76% in pandemic-stricken 2020.

It’s a funny market out there! The market is pretty close to an all-time high, but many growth and micro-cap names have pulled back substantially. Many value names and cyclical names have pulled back sharply despite strong fundamentals. I continue to scour the micro-cap world and see plenty of opportunity.

The late, great market timer Joe Granville was famous for saying that “the obvious is obviously wrong.” In the wake of gold’s recent plunge, many participants wondered if perhaps that might be the case for the widely held belief that the Delta strain of the coronavirus will lead to economy-slowing restrictions this fall.

Last week, we received some news that Medexus (MEDXF) received a complete response letter from the FDA which will delay ultimate approval for Treosulfan.

Today’s note includes ratings changes, earnings updates on six companies and the podcast.

Markets reacted well to yesterday’s inflation data that showed evidence of cooling as the economic recovery continued amid pandemic-related strained supply chains and signs that the recent rise in Covid-19 infections is starting to slow some business activity.

With economic data pouring in amid a slew of earnings reports there is a lot going on out there. The resulting stock price movements often drive a combination of heartache and exhilaration, and that has certainly been the case for us over the last two weeks.

The S&P 500 is at a new all-time high. While the market hasn’t been exciting compared to earlier this year, it’s clearly moving the right way.

BioLife Solutions (BLFS) reported yesterday afternoon and Q1 results beat expectations. Revenue was up 38.6% to $16.9 million (beating by $800K) while adjusted EPS of $0.01 beat by a penny. Management also bumped up full-year guidance, with revenue now expected in the $106 to $115 million range.

Five analysts have increased their EPS estimates for this aviation-supply business in the past 30 days.

Coverage of the shares of this motorcycle manufacturer have been initiated and upgraded by three brokerage houses.

The company’s turnaround from its modest difficulties yet overly-depressed stock appears complete

Recent days have seen substantial selling pressures in the broad market, with growth stocks being particularly hard hit. But the good news is that stocks in the marijuana sector, which had previously corrected 50% from their February peak to their bottom in late March or early April, are not seeing the same selling pressures.

The market remains in the dumps, and while some beaten-down growth names have found support, many are still getting hit on earnings and we’re even seeing selling spread to the broad market.

The shares of this chemical company were just upgraded to ‘Strong Buy’ at Zacks, due to rising earnings estimates.

EVBG, KRNT and CRNC Report. Sell GSHD and CDLX

Although, as expected, this cruise line lost money last quarter, it still beat analysts’ estimates on the top and bottom line.

This tech company just completed the acquisition of Inphi Corporation, and our contributor says this purchase will turn Marvell into a U.S. semiconductor powerhouse positioned for end-to-end technology leadership in data infrastructure.

Yesterday was a bloodbath for growth stocks as concerns of rising rates and high valuations continue to put pressure on these types of stocks. Earnings season has also been a disaster for many growth stocks as “sell the news” has been the trend. Part of me thinks there is programmatic trading going on here as a negative reaction has just become too consistent. But still, overall, the positive momentum from April has been wiped out here in May for many players.

After yesterday’s bloodbath in growth stocks, today feels pretty good. We may be able to thank a downright terrible April jobs number this morning (266,000 added versus expectation of 1 million), which may have temporarily quelled concerns over rising rates.

A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.

Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.

Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.

Our Cabot Top Ten Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Top Ten features.